They might begin bitcoin mining death spiral fud again after this news

[fightfear]

what an interesting discussion!

Not often do I see an argument where both sides are technically correct:

• Yes there has been unreasonable FUD present in Bitcoin for many years (first time I read about Bitcoin's inevitable demise was in 2010!)
• Yes there are legitimate concerns about the security budget

The first point is self-explanatory so I'll skip it for now and will come back to it at the end of my post.
The second point needs some clarifications for context to the first point:

1. High Hashrate does NOT secure the network. The cost of the Hashrate does! as per below

...the output of Proof-of-Work isn’t hashrate – it’s economic cost. What matters is not how many hashes are produced, but how expensive they are to produce. A growing hashrate means nothing if it’s powered by cheaper, more efficient, and more abundant energy + hardware. If BTC-denominated rewards drop, miners may still produce high hashrate, but with fewer incentives to stay honest. That opens the door to cheap attacks, especially if the cost of hardware or electricity falls

2. As it stands, the cost of Hashrate (esentially miners' profits) hovers bewteen $10bn and $30bn. Let's call it $20bn for ease of reference
This means that our network which is currently worth $2trillion (rounded up for easy math) is secured by 1% of its value. In comparison, US military budget represents about 3% of its GDP

3. Bitcoin would indeed need to double in price after every halving for miners to remain profitable (only just, on average) and this is clearly mathematically impossible.
At the last halving Bitocin would need to be worth over $51 trillion PER COIN. Does anyone think this is feasible?
This means a MCAP of over $1 Quintillion which is roughly 10 million times the GDP of our entire planet - good luck with that!

4. Even if Bitcoin doubled every 4 years we'd end up with an asset worth a grotesque amount of money that is secured by an infinitesimally small fraction of its value (assuming fees don't go up - I'll come back to this point later). The security budget doesn't scale with price increase. It's mostly dependent on electricity cost and it's not unrealistic to expect for this cost to go down if anything (with renewables, fusion on the horizon, AI coming up with new ideas etc - sure it's speculation, but not unreasonable at all and even if electricity price continues going up it would be by orders of magnitude less than the mcap doubling every year)

5. 'So the probelm is 2140? I'll be long dead by then, so I don't care' - not so fast. The problem is already here as:
a)  miners already started pivoting to AI and the fewer miners we have, the more centralized the network is. It is not beyond the realms of possibility for politically motivated actors (such as China) to attack Bitcoin. Not for profit but to damage the west. This is especially true given how much reliance on Bitcoin the US seems to be heading towards. Chinese miners control well over 50% of Hashrate and under government pressure they would have little choice but to comply.

b) Bitcoin Security Intensity index (BSI) will  have already dropped to 0.21% by 2032 even if BTC price keeps doubling making such attack relatively cheap. While Bitcoin could technically survive such attack, the trust would likely vanish. Can you realistically imagine Blackrocks of this world (and their clients who are predominantly not crypto enthusiast), banks, sovereign wealth funds, nation states etc investing in Bitcoin after such event? As much as we hate to admit, without these entities, the price would go nowhere given where the MCAP needs to be for the price to grow. There is a real risk bad actors could try spreading FUD about this risk on a global scale to scare off investors, so technically, even in absence of an attack, the security budget issue could seriously derail Bitocin's growth (or worse). We all know how susceptible humans are to fear.



So now let's get back to the first point - the FUD
There's plenty of it and many commentators say to it that Bitcoin is perfect as it is and if things ever get bad - and I quote - "someone will do something"
Seriously? That's the plan?

Here's another quote but from Satoshi himslef:

“In a few decades when rewards get too small, the transaction fee will become the main compensation for [mining] nodes.”

I think it's safe to say that fees aren't coming to the rescue anytime soon.


So if it's all doom and gloom why have I said that both sides are correct? Well, as it happens there is already a working solution and it has recently been adopted by mining pools representing over 60% of hashrate. How does no one know about this??!
That's right, while Hundreds of arguments erupt on Twitter on this topic "someone" actually did something to prepare for these FUD scenarios, so we don't have to worry about it and wait for something to go wrong first, before we take action. Here's the whole story if you can be asked to read it. No subscription or registration required and access is free:

https://medium.com/@marqs90/bitcoins-security-budget-dilemma-an-innovative-fix-emerging-from-the-shadows-e51309201f8d

[d5000]

@fightfear: you bring some valid points, but I generally are more optimistic than you. (See also below.)

At the last halving Bitocin would need to be worth over $51 trillion PER COIN.

This would only be the case if there are absolutely no transaction fees at all.

But the importance of fees increases with every halving. If we now have a 1-3% importance of fees, and the fees stay constant after the 2028 halving (in BTC) then their importance will double at the next halving to 2-6%, and at the 2032 halving to 4-12%, and in 2036, to 8-24%, and finally in 2040 up to almost 50% (16-48%). This is considering almost a worst case scenario because our current fee level with 0.15 to 1 sat/vbyte is very low historically. Even if fees are constant in USD only, their importance will rise with every halving, depending on the price evolution.

4. Even if Bitcoin doubled every 4 years we'd end up with an asset worth a grotesque amount of money that is secured by an infinitesimally small fraction of its value (assuming fees don't go up - I'll come back to this point later). The security budget doesn't scale with price increase. It's mostly dependent on electricity cost and it's not unrealistic to expect for this cost to go down if anything (with renewables, fusion on the horizon, AI coming up with new ideas etc - sure it's speculation, but not unreasonable at all and even if electricity price continues going up it would be by orders of magnitude less than the mcap doubling every year)

No, here your logic is flawed: electricity cost is almost irrelevant, what matters is the attack cost only. If BTC price doubles every 4 years, then both the security budget and the attack cost are constant (without taking into account fees).

In addition, as long as there is a way to recover from a 51% attack (see the attacks on ETC or BSV) the coin will not lose the complete value. It's possible that a "nuclear option" like a PoW/PoS hybrid system could be needed as a "last resort", but very likely it only is needed as a threat to short-sellers.

I also still don't buy the linear centralization story, as written above every relative difficulty decrease should open up opportunities for new innovative miners, e.g. with hybrid business models (AI/PoW).

As much as we hate to admit, without these entities, the price would go nowhere given where the MCAP needs to be for the price to grow.

At the contrary, it would be an opportunity for Bitcoin if all these actors go away -- if there is sufficient retailer adoption. The threat you imagine is possible, but only if Bitcoin stays approximately as speculative and poorly adopted as it is in early 2026.

https://medium.com/@marqs90/bitcoins-security-budget-dilemma-an-innovative-fix-emerging-from-the-shadows-e51309201f8d

Ha-ha! So you wanted to promote your token after all (thus unfortunately no merits, otherwise the post would have merited some ...)

In general I agree though, merged mining (mainly sidechain tokens) is one of the possible income streams that I also think will rise in importance in the future.

[fightfear]

Thanks for your reply d5000

But the importance of fees increases with every halving.

It does increase with every halving, so as you said, every 4 years fees may represent a bigger percentage of the overall rewards but the absolute value of these reward stays unchanged. What percentage of the total rewards these fees represent is irrelevant.

No, here your logic is flawed: electricity cost is almost irrelevant, what matters is the attack cost only. If BTC price doubles every 4 years, then both the security budget and the attack cost are constant (without taking into account fees).

I think we may have misunderstood each other. That is exactly what I'm saying too. security budget and the attack cost remain the same while mcap is going up. That's exactly the problem. If Bitocin is worth guadrillion dollars or even trillions (as is already the case) and it's secured by a mere $20bn then something will go wrong sooner or later. I explain how so in my article.
As for electricity costs, it has a direct impact on what miners earn, so I'd argue that it's the most important factor here, because what miners earn **IS** the security budget

In addition, as long as there is a way to recover from a 51% attack (see the attacks on ETC or BSV) the coin will not lose the complete value. It's possible that a "nuclear option" like a PoW/PoS hybrid system could be needed as a "last resort", but very likely it only is needed as a threat to short-sellers.

I acknowledge that, but it would scare off investors which would result not only in a big selloff but would make Bitcoin far less attractive to major institutions/nation states/pension funds/high net worth individuals and other entities which are pulling the price up. It's almost certain that trust in the network would be lost forever. There are very few people who would understand that things can be fixed and made better. All that the masses would see is a vulnerability and they'd get scared of it happening again (or something else they haven't foreseen because they don't understand how Bitcoin works, which very few people do)

I also still don't buy the linear centralization story, as written above every relative difficulty decrease should open up opportunities for new innovative miners, e.g. with hybrid business models (AI/PoW).

Not sure what you I get your point. Miners are already pivoting to AI as margins get thinner. I don't see any viable innovative solutions appearing to counter the current issues (other than the one I refer to in the link at the end of my previous post), so I don't see why we should expect this to be different in the future given it's far easier to switch to more profitable operations (as evidenced by miners pivoting to AI)

At the contrary, it would be an opportunity for Bitcoin if all these actors go away -- if there is sufficient retailer adoption. The threat you imagine is possible, but only if Bitcoin stays approximately as speculative and poorly adopted as it is in early 2026.

I'd love this to be true. People worldwide get together, stick up their middle fingers to the banks, and switch to Bitcoin. The reality is sadly different because governments will never allow this. We can't even onramp without banks, so I don't see how we could pull this off (In UK and Eurozone it gets increasingly more difficult to move more than few thousand $ into crypto and if there was a real 'danger' of majority of people moving into Bitcoin, governments could easily step-up their efforts to make it impossible. Many people get de-banked for dealing with crypto, so they already have to find creative ways to onboard).

...and even if it was somehow allowed, and as much as it pains me to say it, Bitcoin isn't really all that good for much other than store of value, and it certainly fails as a payment system (Satoshi, please forgive me but if you were around, I'm sure you'd agree with the facts).

...and even if I'm wrong (I'm not, because it's an objectively verifiable fact, but let's go with it), retail has about 50% of wealth but most of it is locked in... bank deposits, equities, bonds, mutual funds, pensions (defined contribution), insurance policies - all controlled by governments/banks. I don't want to sound conspiratorial but THEY. WILL. NEVER. ALLOW. IT. The only way we get 'full' adoption is if it's on their terms.

...and even if I'm wrong with that, how exactly would we get normies to adopt Bitcoin? I'm not sure posting on Twitter and youtube is going to cut it (I'm not trying to mock you, I genuinely struggle to see how, in practice, we could win this battle exactly)

Ha-ha! So you wanted to promote your token after all Tongue

Not at all. I wasn't trying to promote anything. It's not possible to talk about the solution (to this IMO very important problem) that just happens to be a token, without ever mentioning the token.  In fact, I deliberately didn't mention that token here to avoid promoting it. You have to read my article to find out about it and my Medium statistics show that hardly anyone ever does, and this board isn't exactly a fertile ground for shilling tokens anyway, so if I'm spending my time promoting it in this way, then I'm doing a piss poor job! Only the people who are really interested in the subject will get to find out about it, and, as it stands, from this forum they amount to a grand total of 2! I can achieve many multiples of that by posting one tweet!

(thus unfortunately no merits, otherwise the post would have merited some ...)

You lost me here. My post on Bitcoin's security issue only has merit if I don't mention another token, and as soon as I do, the post has no merit anymore? How does that work? Either there's an issue with Security budget or there isn't. Either the things I posted about this issue are true or they aren't. Mentioning another token doesn't have any impact on the existence of the issue or on the correctness of the claims I make in my posts.
I'm sorry that you are not open to anything other than Bitcoin (and you have every right not to), but that doesn't make everything else related to the issue disappear (with all due respect, and I really don't want to pick up a fight here or anything. I just genuinely don't see how my post's merit is somehow dependent on me mentioning another token EVEN IF I was promoting it)

In general I agree though, merged mining (mainly sidechain tokens) is one of the possible income streams that I also think will rise in importance in the future.

I'm glad we agree on so many points.
Just for clarity, this token is not merge-mined. It's distributed to ALL miners at coinbase level based on the bitsfield, whether they are aware that they're getting it or not. No need to give away precious mining bandwidth / risk a part of your profits, no need to invest anything whatsoever and definitely no need to increase Bitcoin's supply or take someone else's coins, as some OG's suggest. That's why it's such a neat solution.
I don't know if it will take off or not but I'm planning to watch it closely and have my popcorn ready.

[Satofan44]

@fightfear: you bring some valid points, but I generally are more optimistic than you. (See also below.)

Many of the points are just manipulations, such as that high hashrate does not protect the network but the cost does. Anyone with a working brain understands that hashrate is being used as a proxy to talk about the real cost of hashrate. Otherwise what does it mean if you have some amount of hashrate? There is no way to quantify it without having information that relates to the specification of mining machines, their cost, their energy expenditure and their overall cost of setting up and operating. The same can be said about miners pivoting to AI and the "problem is here now" bullshit. There is no problem, miners have been coming and going since the dawn of Bitcoin. There were even much bigger mining crises in the past. Let markets operate how they want, users need to stop falling for FUD and we must stop entertaining it too.

Anyway, I have left him a negative tag a few months ago for posting bullshit and using AI. Do not engage with him, put him on ignore. Thank you.

[d5000]

It does increase with every halving, so as you said, every 4 years fees may represent a bigger percentage of the overall rewards but the absolute value of these reward stays unchanged. What percentage of the total rewards these fees represent is irrelevant.

The absolute value of the fee part of the rewards stays constant only if the Bitcoin price does not increase. And even then: if the fees stay constant, then they are a "minimum income" the miners more or less can count with and which will not be affected by halvings.

If the Bitcoin price increases, then the fee income of miners also will increase. I think for many Bitcoiners the most likely scenario is a deflationary Bitcoin with still increasing price, but a price increase below 100% in 4 years. If in the next halving period (until 2028) the price increases from current ~90000 to ~150000, and rewards stay around 0.05 BTC (1.5% of the current block reward of 3.125 BTC), then these 0.05 BTC will increase from 4500$ to 7500$.

That is exactly what I'm saying too. security budget and the attack cost remain the same while mcap is going up.

This part is correct.

As for electricity costs, it has a direct impact on what miners earn, so I'd argue that it's the most important factor here, because what miners earn **IS** the security budget

That's the part I criticised. If the electricity cost goes down, in the medium term this has a positive impact on difficulty (=more hashrate), and thus the attack cost will be still constant.

I acknowledge that, but it would scare off investors which would result not only in a big selloff but would make Bitcoin far less attractive to major institutions/nation states/pension funds/high net worth individuals and other entities which are pulling the price up. It's almost certain that trust in the network would be lost forever.

"Forever" is a strong word. As I wrote some altcoins were 51% attacked and are still relatively successful. Of course they have no pension funds, but my argumentation later accounts for that: in a healthy Bitcoin environment with mass adoption, these actors should not be important to sustain the price.

I don't see any viable innovative solutions appearing to counter the current issues

Not imagining innovations before they actually happen is normal ... that's why big companies often fail with innovation ("creative destruction" / "innovator's dilemma").

While you're correct that the AI/PoW hybrid isn't new and big actors easily can adopt that model, there are other techniques which are diametrally opposed to the current mining business model, such as "peak PV/wind energy scalping", i.e. use hours with negative electricity prices due to PV and wind energy to mine Bitcoin with cheap and less powerful hardware. That's only an example, adapting to that would be much more difficult for miners who are accustomed to a 24/7 farm with new and expensive hardware.

The reality is sadly different because governments will never allow this.

I disagree but that gets into political territory and so I won't go into details here.

Bitcoin isn't really all that good for much other than store of value, and it certainly fails as a payment system

Why? Because of scalability? There are tons of second layers, both existing and conceptual. Apart from Lightning, tBTC (Threshold) and Nomic are often overlooked milestones (basically Liquid but decentralized).

Or Gresham's Law? See this thread, we're discussing that in the latter part. There also the "how to get normies adopted" is touched (short tl;dr: merchants could adopt it first because of less costs comparted to Visa/Paypal etc., offering discounts for Bitcoin purchases. That will however only work if Bitcoin becomes less volatile.).

Not at all. I wasn't trying to promote anything. It's not possible to talk about the solution (to this IMO very important problem) that just happens to be a token, without ever mentioning the token.

You should have been simply transparent and it would be okay, as many here are advertising something.

So I'd recommend you changing the previous post, so Instead of sneakingly writing "there's a solution: look into that Medium article!" describe briefly how your solution looks, before you drop the link.

And even if it's technically not merged mining, it is very similar to merged mining when it comes to its potential for miner income.

You lost me here. My post on Bitcoin's security issue only has merit if I don't mention another token, and as soon as I do, the post has no merit anymore?

I was referring to the Merit system of Bitcointalk (only if you didn't know it). I can decide how I distribute merits, and others may merit you anyway, but I have to say that I didn't like the way you linked to your token solution and Medium post, to the extent that it blocks me from meriting you ("stealthy" advertising outside of signatures and marketplace sections is even forbidden by forum rules, so I could even get problems if I merited you, some other people would already report you to the mods) You can still get merits from me, if you want that, if you change the post just as I recommended in the last paragraph.

I'm sorry that you are not open to anything other than Bitcoin (and you have every right not to),

Here you're mistaken. I participate actively in the altcoin section and there are definitely altcoin projects I'm interested in (e.g. Monero). And I may actually look into your token project closer.

EDIT: After I read @Satofan44's post and checked your post history, you seem to already have promoted your token in other sections in the same stealthy way. It's very unlikely I'll merit you thus or take your token into account.

[fightfear]

The absolute value of the fee part of the rewards stays constant only if the Bitcoin price does not increase. And even then: if the fees stay constant, then they are a "minimum income" the miners more or less can count with and which will not be affected by halvings.

If the Bitcoin price increases, then the fee income of miners also will increase. I think for many Bitcoiners the most likely scenario is a deflationary Bitcoin with still increasing price, but a price increase below 100% in 4 years. If in the next halving period (until 2028) the price increases from current ~90000 to ~150000, and rewards stay around 0.05 BTC (1.5% of the current block reward of 3.125 BTC), then these 0.05 BTC will increase from 4500$ to 7500$.

I stand corrected (not that it matters much given the declining fees and increasing number of empty blocks, along with OG's shouting "Spam!" each time someone comes up with an idea that makes fees go up thus solving the problem [facepalm], however you are right on that point and I was wrong)

Not imagining innovations before they actually happen is normal ... that's why big companies often fail with innovation ("creative destruction" / "innovator's dilemma"). Wink

Point taken

You should have been simply transparent and it would be okay, as many here are advertising something.

I wasn't trying to be sneaky. I posted about the token openly before (not shilling it - just discussing it more openly, as you suggested) and got called names I haven't heard for 30 years. After this abuse my entire thread was removed, so that's why this time I didn't mention anything about the token. I assumed that if someone is interested enough in the subject, then they won't mind learning about a token related to this subject, on a website where my post won't be removed by people who can't cope with discussions which don't align with their own views. And if the reader is not interested enough to read an article on another website, then we can just continue discussing the issue itself, without getting into other tokens.

Perhaps it's hard to believe, but I'm simply excited about this development, so I do want to share and discuss it on this forum with SME's and maybe learn something in the process. If this solution takes off then it could be one of the biggest things in crypto, regardless of whether I make a ton of money on it or not. I see the security budget issue being brought up quite often elsewhere, so I'm not the only one who thinks it is a concern.
Am I promoting the token? I think we both know that the time I spend discussing another token on here to pump it would be wasted and would not make any meaningful difference to the price anyway. It's just not the place to 'shill sh*tcoins to pump&dump'. There are far better venues for that.

I was referring to the Merit system of Bitcointalk

I wasn't aware of any merit system on here (which I can only assume is some kind of reward scheme or something), so my bad.

Here you're mistaken. I participate actively in the altcoin section and there are definitely altcoin projects I'm interested in (e.g. Monero). And I may actually look into your token project closer.

Fair enough. I take it back


Thank you for a civilized discussion. I really appreciate it